Q3 2025 Rocky Brands Inc Earnings Call Transcript
Key Points
- Sales for the quarter increased by 7%, demonstrating strong demand for Rocky Brands Inc (RCKY)'s products.
- Gross margins improved by 210 basis points, indicating better profitability.
- Adjusted diluted EPS rose by 34% to USD 1.03, showcasing significant earnings growth.
- The company successfully diversified its sourcing base, reducing reliance on China and Vietnam by adding new manufacturing partners in Asia and leveraging facilities in the Dominican Republic and Puerto Rico.
- Strong performance from the Extra Tough brand, with double-digit growth in both US wholesale and online sales, driven by popular products like the Legacy six-inch ankle duck boot.
- Higher tariffs imposed by the US are expected to impact gross margins more significantly in the fourth quarter and into 2026.
- Delayed shipments due to ramping up production with new partners, affecting sales timing.
- Operating expenses increased, driven by higher logistics and selling costs, as well as increased marketing investments.
- Durango brand sales were down year-over-year due to key accounts pulling forward orders ahead of a price increase.
- Inventory levels increased by 12.7%, partly due to higher tariffs and increased raw materials, which could pressure cash flow.
Good afternoon ladies and gentlemen and thank you for standing by. Welcome to the Rocky Brands third quarter 2025 earnings conference call. [Operator Instructions]
I will now turn the conference over to Cody McAllister of ICR.
Thank you and thanks to everyone joining us today.
Before we begin, please note that today's, including the Q&A period, may contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995.
Such statements are based on information and assumptions available at this time and are subject to changes, risks, and uncertainties, which may cause actual results to differ materially.
We assume no obligation to update such statements. For a complete discussion of the risks and uncertainties, please refer to today's press release and our reports filed with the Securities and Exchange Commission, including our 10-K for the year ended December 31, 2024.
And I'll now turn the conference over to Jason S. Brooks; Chief
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